Ten years after the financial crisis of 2007-08 began to rock the economy, and following numerous malpractice and misselling scandals over the years, the media conversation is still dominated by negative perceptions of an industry that is struggling to regain customer trust.
The findings of Edelman’s Trust Barometer make uncomfortable reading for the UK financial sector. The longest running global survey on consumer trust finds that in 2017, just 45% of UK consumers have trust in financial service provision, with the sector remaining the most distrusted over all others.
These are worrying statistics for an industry that is reliant on the confidence of its customers, and where in reality many financial brands are viewed as ‘necessary’, versus brands that are ‘trusted and believed in’.
Does lack of trust equal lack of loyalty?
Introduced in 2013, the Bacs Current Account Switching Service (CASS) was designed to allow customers access to the best deals and to increase competition and fluidity within the market. At just under 6% of total accounts switched since its inception, we are far from the nation of innate rate-chasers that price comparison and aggregator websites would have us believe.
However, ‘new customer’ offers and incentives are fuelling the perception that brands place a higher value on attracting new account holders with their best deals than on servicing existing loyal ones by building long-term relationships.
Winning new relationships can provide a lifetime of opportunity for financial brands to sell more banking products and earn advocacy. Given the low rate of new relationship formation, however, this route alone is not sufficient as a growth strategy.
Marketing efforts for these customers are almost always offer-led, attracting the deal-chasers. It’s rarely emotive or focused on the longer term or wider brand benefits such as service quality, ease of use and reputation for the loyal majority.
Utility at the expense of emotion
It is clear that financial service providers are facing challenges to balance their approach to changing consumer attitudes towards loyalty and engagement. Some companies have moved away from new customer benefits and incentives, instead choosing to adopt a more equal and consistent approach among their customer base. Others have sought to develop more profitable and loyal customer relationships by incentivising people to take out multiple products with them as an existing provider.
Price may be the obvious choice for some products like insurance and in attracting the rate chasers; but when it comes to more complex products, such as mortgages, customer experience has an even bigger part to play.
Getting customers to switch is one thing, but keeping them loyal is an entirely different skill that requires the brand to continually learn about their customers’ evolving behaviour. Data management becomes critical to understand and better target customers; to be there when they are needed, and never when they are not; to segment their customer behaviours on both a rational and, more importantly, an emotive level.
In this way, digital fintech companies and challenger brands are leading the way with innovation and technology to ensure that their customers are front and centre, and are ultimately empowered. While service channels continue to move online, customers still demand personal relationships with their finance providers.
Brands such as First Direct and Metro Bank, and innovative new players such as Atom bank and Monzo are changing the digital landscape through more fluid and targeted engagement, to ensure customer’s needs are placed above everything else. This is highlighting gaps in the traditional financial institution’s customer experience and loyalty performance.
Zoe Burns-Shore, head of brand marketing at First Direct agrees: “Brand loyalty in financial services is almost an oxymoron. Most people stay with their bank out of inertia rather the through any genuine loyalty. However, I’m incredibly privileged to say that our customers at first direct are different. And that isn’t an accident.
“Our business is built around our customers, and I know lots of brands say that, but the reality is often far from the truth. We want every customer to be delighted by every interaction they have with us. This isn’t about advertising – it’s about experience.”
What emotion means for financial services
The default is often to reflect more emotive benefits via broadcast messaging, and then resort to the tried and tested product-push strategy across different touch points, which ultimately can result in a hit-and-miss experience and lack true customer understanding.
In reality, the opportunity for financial services brands to connect emotionally and credibly is to create an outstanding customer experience across every touch point, whereby the customer and their finances are front and centre to the offer and they are empowered both rationally and emotionally to ensure their loyalty.
However, when wanting to create loyalty or drive a sense of emotional connection we see many either shying away from this for fear of their offers not cutting through, or using the wrong channels to connect.
“For First Direct, it’s about doing all the things customers want from a bank in the most painless and simple way possible,” says Burns-Shore.
“It’s about having real people available to answer any question a customer has 24/7, 365 days a year. It’s about empowering every person in our organisation to change processes, procedure and policies that make our customer’s lives in any way difficult. It’s about fostering an internal culture that is all about genuine passion for the customer.
“A lot of this is quite mundane and it takes commitment and time to keep sweating the small stuff, as well as developing the bigger, sexy stuff. But with 92% of our customers saying they would recommend us to someone else, I think it’s commitment that pays off.”
Relationships must make you feel special
What should not be underestimated is the importance of delivering a brand via optimised CRM, in real-time, empowering the customer and supporting them by understanding their world and what makes them tick.
A recent study by Jaywing shows that financial service marketers are starting to follow the growing trend of becoming customer-obsessed. They rank ‘improving the customer contact strategy’ (64%) and ‘improving customer retention strategies’ (55%) as top priorities in 2017.
The challenge for finance brands is moving more traditional and rational strategies for CRM to one that is customer-centric and truly engaging.